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USA and China: Factory construction in China to be prohibited

USA has imposed new sanctions against China. Under a new resolution signed by US President Joe Biden, US companies will henceforth be prohibited from operating factories in the People’s Republic.

New dispute between US and China

A sprawling trade war has been raging between the U.S. and China for some time. This is expanding month by month in the form of new sanctions. While the sanctions on the part of the USA at the beginning mainly prohibited the import of products from some Chinese electronics companies such as Huawei, these now go a lot further. For example, we reported in July that exposure machines important for semiconductor manufacturing would henceforth no longer be allowed to be exported from the US to China. One reason for the trade war is most certainly the Taiwan conflict. In view of the current global chip crisis, the island state, namely, is of utmost importance for both the Far East and the West.

For example, two-thirds of the semiconductors produced worldwide come from Taiwan. But now the USA is going one step further. Indeed, once you realize how many U.S. companies rely on low-cost production in China, the weight of the sanctions becomes clear. The first major US companies seem to have already been aware of the plans. Apple, for example. The company, which last week unveiled its new iPhone 14 and iPhone 14 Pro, would soon like to focus on production in Vietnam. This is to minimize the dependence on China.

USA wants independent chip production

With the new sanctions the goal becomes clear, which USA, in addition, the EU pursue for some time. For example, the chip crisis ensured that the West is increasingly focused on creating its own semiconductor production. After all, most of this technology has relied on China up to now. Probably the best-known example is Apple. The US company, based in California, has always had its iPhone produced cheaply in China. The new sanctions are intended to encourage U.S. companies to turn their backs on China and henceforth, in the best case scenario, to focus on production in the United States.

To create incentives, the U.S. has put together an extensive subsidy package to encourage companies like Intel to build new production facilities. Just last month, the Land of Opportunity filled up the subsidy pot again. However, only those who abide by the rules are allowed to access the funds. Projects are only eligible for funding if the company in question does not open a new factory in China within the next ten years. This could lead to a major rethink among many companies. However, customers would then certainly have to adjust to higher prices.

EU Chips Act as a model for success

Europe, on the other hand, is not taking such offensive action against China as is the case on the part of the United States. Given the great importance of the automotive industry in the People’s Republic, this would probably also be economic suicide at present. But that does not mean that the EU is not also trying to become more self-sufficient. The EU Chips Act, for example, is intended to ensure that chip producers also settle in our climes. With a pot of money of about 45 billion euros, the funding amount is lower than in the U.S., but the projects already sound promising.

The best-known example is probably the large chip factory Intel wants to build in Magdeburg. However, it will probably be a few years before the switch to purely European or U.S. production is complete. Perhaps the relationship between the USA and China will have relaxed a little by then, so that we will not only be able to hold priceless technology in our hands in the future.

Simon Lüthje

I am co-founder of this blog and am very interested in everything that has to do with technology, but I also like to play games. I was born in Hamburg, but now I live in Bad Segeberg.

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USA has imposed new sanctions against China. Under a new resolution signed by US President Joe Biden, US companies will henceforth be prohibited from operating factories in the People’s Republic. New dispute between US and China A sprawling trade war has been raging between the U.S. and China for some time. This is expanding month … (Weiterlesen...)

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